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Following the launch of the Mainland-Hong Kong interest rate swap markets mutual access scheme (Swap Connect) on 15 May 2023 as part of the national strategy to steadily advance the opening-up of Mainland’s financial markets, transaction volume under the scheme has been growing steadily. In May 2024, Swap Connect was enhanced to provide more flexibility for offshore institutional investors to manage interest rate risk, and strengthen the appeal of RMB assets to offshore investors. As of the end of April 2025, 20 Mainland dealers and 79 offshore investors had participated in Swap Connect, completing more than 12,000 interest rate swap transactions with an aggregate notional amount of approximately RMB 6.5 trillion.
To further promote the collaborative development of financial derivatives markets on the Mainland and in Hong Kong, as well as to support the high-quality opening-up of Mainland’s financial markets, the People’s Bank of China (PBoC), the Securities and Futures Commission (SFC), and the Hong Kong Monetary Authority (HKMA) plan to further enrich the product types under Swap Connect, after fully assessing the operational experience of Swap Connect and feedback from Mainland and overseas investors. First, the tenor of interest rate swap contracts would be extended to 30 years to meet the diverse risk management needs of market institutions. Second, the product scope of Swap Connect would be expanded by including interest rate swap contracts using the Loan Prime Rate (LPR) as the reference rate. Relevant infrastructure operators in both markets will implement these enhancement measures progressively.
Looking ahead, regulatory authorities on the Mainland and in Hong Kong will continue to provide guidance to financial market infrastructure operators in both markets to continue to enhance relevant arrangements, taking into account Swap Connect’s operational performance. These efforts aim to steadily advance the further opening-up of Mainland’s financial markets, promote RMB internationalisation in a steady and orderly manner, and support the development of Hong Kong as an international financial centre.
